Mostly Paved - Road Surfaces

Definition of Mostly Paved Road Surfaces

In the context of commercial mortgages and property assessments, "Mostly Paved" refers to a property access or site condition where the majority of the primary driving lanes, entrances, and parking areas are finished with hard surfaces such as asphalt, concrete, or macadam. However, the designation implies that certain sections of the property—such as secondary storage yards, overflow parking, or perimeter access roads—remain unpaved, typically consisting of gravel, crushed stone, or compacted dirt.

Importance in Commercial Mortgage Underwriting

Lenders evaluate road surfaces to determine the accessibility, durability, and overall value of the collateral. A mostly paved surface is often viewed as a middle-ground classification between fully improved urban sites and unimproved rural or industrial land. Key considerations for lenders include:

• Accessibility and Logistics: For industrial or retail properties, the quality of the pavement affects the type of vehicles that can safely access the site. Heavy machinery or freight trucks may require reinforced concrete, whereas gravel sections might be restricted to light-duty use.
• Maintenance Requirements: Unpaved portions of a property require more frequent grading and dust control. Lenders may factor these ongoing operational expenses into the property’s Net Operating Income (NOI) calculations.
• Environmental and Drainage Factors: Paved surfaces increase water runoff, requiring robust drainage systems. Conversely, unpaved areas allow for natural percolation but can lead to erosion or mud issues that might impact the structural integrity of the paved sections.
• Appraisal Adjustments: Appraisers will compare the subject property to "comparables" in the market. If competing properties are 100% paved, a "mostly paved" property may receive a downward adjustment in valuation.

Operational Impact and Property Types

The Mostly Paved designation is most common in specific commercial asset classes, including:

• Industrial and Flex Spaces: Where the main loading docks are paved for heavy traffic, but rear storage lots remain gravel to reduce construction costs.
• Self-Storage Facilities: Often featuring paved drive aisles between units for customer convenience, while the expansion land or RV storage areas remain unpaved.
• Agribusiness and Rural Commercial: Where the main office and retail storefront are paved to meet local zoning codes, but the functional work areas are left as permeable surfaces.

For a borrower, having a property classified as Mostly Paved usually satisfies most standard lending requirements, provided that the primary ingress and egress points are well-maintained and capable of supporting the property's intended commercial use throughout all seasons.